Retiring At 60 Becomes Distant Dream

The Sparks of Petaluma, Calif. had planned to retire to Hawaii. The couple may now have to adjust their dreams given the situation on Wall Street.

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ALEX CHADWICK, host:

It's Day to Day from NPR News. I'm Alex Chadwick. Ever since the stock market turned into a daily roller-coaster ride, NPR reporters have been talking with people around the country about how they are coping. We call these Kitchen Table Conversations. It's where so many families make big decisions. I heard one earlier on Morning Edition. Here's the latest now, a couple contemplating retirement. More from NPR's John McChesney.

JOHN MCCHESNEY: The Sparks live in a brown, one-story, ranch-style house. It's a quite modest 1,400 square feet, where they have lived and raised two children over the past 27 years. They'd planned on retiring to Hawaii, and as we sat down at the kitchen table with their financial advisor, Jeff Lambert(ph), I asked them about conversations they'd had at this table a year ago.

Mr. MICHAEL SPARKS: We'd think about our house and what we're going to move into and how often our kids would be coming over. We had this plan that we'd so carefully grafted.

Ms. NANCY SPARKS: It's still there, but now we're thinking he might have to work full time instead of half time.

MCCHESNEY: Fifty-seven-year-old Michael is a consultant to city governments on alcohol and drug abuse. He'd hoped to continue that kind of public service work, but now, he's not sure that's possible.

Mr. SPARKS: More likely, I'll end up being a greeter in Wal-Mart or Loew's. I'm being serious, it's doing some work. And I'm not exactly sure what that will look like. It may be having a 16-year-old kid tell me how to go make a latte for somebody. Because the dollars we thought we could draw down when I hit 60 from our retirement plan, I don't think are going to be there.

MCCHESNEY: Give me some idea of over that last year, what kind of conversations you've had in the morning as you're reading the newspaper or watching TV?

Ms. SPARKS: Well, I don't know about over the last year, but over the last three weeks, Michael would come into the living room - he came home from work one day and he dropped his briefcase, he said, that's it, we're not going to Hawaii.

(Soundbite of laughter)

Ms. SPARKS: And I went, OK. And then the next day he came back in, and he said, OK, it's back up, we're going to Hawaii. I mean, day by day, it just kept changing.

MCCHESNEY: Of course, retiring to Hawaii sounds pretty good to most Americans, but the Sparks' plan is, or was, rather modest. A 950-square foot cottage supported by some rental property, which is now worth less than what they paid for it. To do the deal, they took out a loan, which they intended to pay off when they sold their home in Petaluma.

Mr. SPARKS: Sonoma County, you know, here in Petaluma, we've watched housing prices - this house has declined, as of today, about 40 to 45 percent of its value. All that money is gone.

MCCHESNEY: Up until the dot-com bust in 2001, Michael had managed the family's retirement funds on his own. That didn't work out too well.

Mr. SPARKS: I lost most of what I had, a significant percent of what I had.

MCCHESNEY: So, following that loss, the Sparks hired a financial advisor, Jeff Lambert, with whom they have a warm relationship. But still, they didn't consult him about the purchase in Hawaii. Lambert is not a fan of real estate investments.

Mr. JEFF LAMBERT (Financial Advisor): Did I scold them? Oh, I beat them with a stick.

(Soundbite of laughter)

MCCHESNEY: So, they have 401(k)s and IRAs. What have you done with those?

Mr. LAMBERT: Well, for several years now, they were cranking.

(Soundbite of laughter)

Mr. LAMBERT: And now they is tanking.

(Soundbite of laughter)

MCCHESNEY: Despite the jocularity around this table, the simultaneous loss of home and stock value will mean a dream defered or a dream seriously altered. Nancy, a legal secretary, who has a bookkeeping business on the side, says she planned on working full time when they moved to Hawaii, but now she's worried.

Ms. SPARKS: My concern is age. I don't feel old, but I realize other people are going to look at me at and go, why do we want to hire this older woman? We have a pool of young people. So, I'm just hoping that that doesn't work against me.

MCCHESNEY: And Michael says it's pretty clear he'll have to work full time much longer than he planned.

Mr. SPARKS: Everybody I talk to now is basically saying, I've added five years to my work life. And so I think we're all recognizing that the dollars we had saved are not going to sustain us the way we'd hoped they would, and basically we'll have to work longer.

MCCHESNEY: And there's something else: their general fear that they are in unchartered waters and don't know where there is a safe port. Best advice from the Sparks: hire a good financial advisor, and don't keep any secrets. John McChesney, NPR News, San Francisco.

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